J.C. Penney Loan Arranged by Goldman Sachs to Be Covenant-Light

April 29 (Bloomberg) -- J.C. Penney Co., the retailer
that’s working to rebound from its worst sales year, will offer
fewer safeguards to lenders on its $1.75 billion financing.

The five-year covenant-light deal, which is being arranged
by Goldman Sachs Group Inc., won’t include financial maintenance
requirements that typically prevent borrowers from loading up on
debt, according to a regulatory filing today.

The debt will have a 1 percent minimum on the London
interbank offered rate, according to the filing. Lenders are
offered call-protection of 102 cents in the first year and 101
cents in the second year, meaning the company would have to pay
premiums of two cents and one cent to repay the debt during that
period.

Proceeds will be used to fund working capital requirements
and “to amend, acquire or satisfy and discharge” the 7.125
percent notes due in November 2023, Plano, Texas-based J.C.
Penney said today in a statement.

J.C. Penney drew $850 million from its $1.85 billion
revolving line of credit facility earlier this month, according
to an April 15 statement.

In a revolving line of credit, money may be borrowed again
once it’s repaid; in a term loan it can’t.